We all want simple. Sometimes simple is best, but we tend to convince ourselves, even when the data indicate otherwise, that the simplest, most straightforward answers are the correct ones. When we do that, we often find ourselves in a more complicated situation than we might have if we’d done the analysis and hard work first.

I think, in some ways, senior management at many (but by no means all) publishers want an Easy Button to simplify the route from a primarily print to a primarily digital world. It’s a trap, but not because the easy solution to any given problem could be the best. It’s because the inter-relationships of the many functions publishers have performed and will need to perform going forward are of such complexity that optimizing one process can sub-optimize the whole. So the Easy Button, however appealing, is a dangerous thing.

Because of the inter-relationships, I’d argue that structuring publishing operations going forward is a strategic matter requiring top-down direction and oversight, not a tactical issue to be addressed by individual departments, divisions or imprints. Building from the bottom up risks duplication of effort as well as sub-optimal outcomes for the organization as a whole.

Among the most important items that need thorough review and possible restructuring for an outcome that provides the highest probability of survival and a prosperous future are:

Clarity on the vision and a coherent strategy for where the organization needs to be and what it wants to do going forward;

Are the organizational structure and the human resources in place adequate to achieve the vision and goals or is a realignment (not necessarily downsizing) required? As an example, we still see digital groups or departments in some publishing firms, almost assuring a two-track approach to products and marketing that is inherently inefficient and increasingly antiquated;

Are the acquisition, internal management and output of content efficient and congruent? Could more be done with title management and content management systems?

Is workflow optimized for content creation in multiple formats? If the organization is not ready or able to adopt a full XML workflow, can it optimize its existing workflow to assure efficient outputs complete with metadata and other discovery tools.

Are existing supply chain and distribution arrangements adequate for current and future outputs? Does the company have arrangements in place to serve global and increasingly mobile markets?

Is the rest of the marketing mix (product, pricing, positioning,packaging, etc.) aligned with new realities? Further to organizational structure, is the marketing group integrated into the process from the acquisition of content through sale?

Finally, is the company’s culture aligned with its vision and strategy? It’s difficult to act in an entrepreneurial and innovative environment with a culture that’s locked into a different view of what a publishing program should be.

None of these matters is easy to address as a stand-alone issue. Integrating the solutions into a coherent whole is even more difficult. Don’t fall into the trap of the quick solution or the Easy Button. Do the hard work now (and get help if you need to). It’ll pay off sooner than you think and the cost of not doing so could be steep.

If print book publishing is to survive in a rapidly digitizing world, traditional models for decision-making around print must evolve into models that better fit the times. Print book publishing has been driven by the vision of continuous growth in volume–which generally translated into selling more copies of more titles and (thus more printing). This older vision of growth–and the fear of unfilled demand (which jeopardizes growth)– translated into a business model that sought profit primarily in economies of scale. Ever increasing print volume led to a focus on reducing the unit cost of each print book, driving up print quantities, which further drove efficiencies in offset printing, high volume finishing (i.e., jacketing, binding, etc) and mass logistics and distribution.The reality is that print book sales in the US peaked in 2007. The pinnacle was reached by the final Harry Potter title, and sales of print books have declined significantly each year since. At this point in the 21st century, preserving a model driven by print book volume growth is folly. Instead, a new vision through ensuring a sustainable eco-system around printed books should be the goal. Central to this new vision is a rethink of traditional print quantity decisions.

Fortunately, the conceptual model needed to replace the unit cost model is readily available for adaptation: “total cost of ownership” or TCO. Rather than using unit cost as the primary determinant of print quantity and profitability, TCO introduces additional inventory related carrying costs that act to constrain the attractiveness of lower unit costs that stem from higher print quantities.

What print decision-making strategies complement a TCO model? The most fundamental is that “less is more.” Printing fewer copies more frequently is the basic premise. To do this involves finding a new balance between simple p & l cost analysis (unit cost is a key driver), and a more inclusive review of the implications of purchasing inventory (TCO). Reducing the size of inventory investment occurs transaction by transaction. TCO is an approach that requires consistency and discipline, as well as timely access to relevant demand and inventory data. Book publishers need to realign metrics, accounting, and incentives to reinforce the TCO vision.

The drawing below shows the extent of inventory carrying costs that are in addition to unit cost. As the shift to digital accelerates, capital, service, risk, and storage costs need to be considered with greater rigor rather than be treated as “external” to a print quantity decision (as was the case too often in the growth era). Of all of the cost factors shown below, the inventory risk costs, primarily the risk of obsolescence, are huge in a disrupted environment. Customer demand for print is rapidly changing, and is much less predictable than before.

non-unit cost inventory costs

Depending on the level of activity for the title, reducing print quantities typically triggers the need for short-run digital print solutions. Book printers need to increase their capabilities/capacity to make economical digital print books. Publishers and their printing partners need to utilize distributed print networks to enable printing closer to where the book is needed, saving shipping time and cost. As more print titles move towards being considered “long tail”, print on demand services (combined with direct fulfillment) will comprise a larger piece of the pie. TCO also calls for better demand forecasting for titles where inventory must be held. The forecasts should be based on updated market models that reflect the new realities of the print book marketplace.

Additionally, given shrinking print revenues for the foreseeable future, publishers are also challenged to financially support the staff and systems required to manage the print side of the business. This could open the door to investments supporting more automated, streamlined print transactions. Pressure to reduce staff costs could lead to mutually advantageous transfer of staff and functional duties from publishers to printers or other 3rd parties. Whether this takes the form of limited business process outsourcing or more comprehensive vendor managed inventory programs, it’s clear that there are many opportunities for creative solutions to the challenge of sustaining the print book ecosystem.